Change We Can Really Believe In: Our Opportunity to Transform Taxation in America

With Tax Day 2014 behind us, it might be tempting to turn away from thoughts of the taxman and to let the pain abate a while. For decades Americans have done just that; they have accepted taxation, albeit begrudgingly, as a necessary part of life in society and have taken the hurt with a certain stoicism. Sometimes voices have been raised against the sapping power of taxation, yet taxes have continued to rise along with government spending. The time of stoic acceptance may be coming to an end.

A series of recent Reason-Rupe polls, however, has revealed that discontent with the Byzantine tax code, and the feckless government apparatus it supports, has reached record levels. According to the polls, a general disbelief in the government’s ability to make efficient use of taxpayers’ money that has been built up to the point where respondents now believe that half of every dollar paid in taxes is wasted!

Similarly, a concurrent poll found that a mere 17% of Americans believe that government spending of tax money was better for society than would have been giving the same amount of money to charity or investing it in private business. Furthermore, more than one-third of respondents said government spending was actually less beneficial than charity or investment. That is far from a ringing endorsement of the current tax regime.

The mixture of these two beliefs, in government waste and in superior alternatives, can make for a powerful cocktail for reformist sentiment. While it might once have been possible to dismiss organizations seeking to overhaul the tax code, like Americans for Tax Reform, as a radical fringe element in the conservative movement, that is no longer possible when a majority of citizens are now convinced of the system’s iniquities.

Right now we are confronting a real, and perhaps unique, opportunity to fundamentally transform the way our government collects and spends citizens’ money. The wave of discontent is gathering and the winds of change are blowing it into a swell. The fact of this transformative mood is revealed in a further Reason-Rupe poll, which shows an astonishing 62% of Americans now in favor of replacing the current graduated income tax with a flat-rate tax.

Reformist moments are often few and far between in politics, and this one will not last long. Democratic politicians in particular are adroit at turning public discontent with government failure into anger at the wealthy. Gallup polls show a growing sentiment among respondents that the current distribution of wealth is unfair and that heavy taxes on the very rich would help serve to redress the balance. While this sentiment may at first seem contradictory to the desire for a flatter tax system, upon close inspection it is not. Indeed, much of the anger is the product of misdirected blame.

Many middle class and aspiring-to-middle class Americans see an apparent imbalance of power in the tax system. While some wealthy citizens can exploit loopholes in the labyrinthine tax code, ordinary people are not so lucky. This has led to a dangerous resentment.

What can be done to ameliorate these desires for greater equity in taxation? Clearly a majority are beginning to see the value of a flat tax in terms of the basic concept of equitable taxation. A properly administered, flatter tax can also go a long way to correcting the resentments that are boiling up in the Gallup poll and spurred on by left wing class warriors. A flatter tax would need to eliminate the loopholes that have become rhetorically devastating to supporters of free markets. The general discontent with the way our tax system works must be harnessed not only to reduce taxes, but also to eliminate the cracks and holes through which people can slip.

While paying the set rate of tax may be unpleasant to someone of means, it is the necessary requisite for a flatter tax system to be implemented and to succeed.

John Engle, a graduate of Trinity College Dublin, Ireland, and the University of London, is the president of Almington Capital Inc. John is a former intern in the communications department at The Heartland Institute.

“Clearly a majority are beginning to see the value of a flat tax in terms of the basic concept of equitable taxation.” While the rate is the same for everyone, the higher one’s income the more dollars of tax paid. With a flat tax rate, a taxpayer earning 10 times the average income would pay about 10 times as much in taxes that the average. How do you justify that? It’s not because of using 10 times as much in government benefits. The only justification for making the high income earner pay 10 times as much as the average taxpayer is the same old Marxist redistributionist justification employed for the current rate structure: “ability to pay”, aka, soak the rich. Where are your principles that you push this redistributionist idea??

ALL taxpayers should be paying equal dollar amounts, so every taxpayer thereby forgoes an equal amount private goods that could otherwise have been purchased. That’s true equal sacrifice with no redistribution, and it is the only “basic concept of equitable taxation” that’s worth talking about.

AllMenAreIslands

I think you have side-stepped the essential point about tax, which is that it represents the legalized use of coercion by government. The proper PURPOSE of government is the legal use of force. And the proper kind of force to be used is retaliatory in nature – against those who initiate its use. Tax represents an initiatory use of force and that means the very institution charged with protecting us against initiatory force is permitted to itself initiate force. This is why tax is wrong. The government cannot both defend us against coercion, trespass and fraud and at the same time be allowed to coerce us to pay for that defense. This contradiction is the root cause of the failure of government officials, the failure of the tax system itself, and the rise in real crime.

Discover the truth about tax and then advocate for its abolition. In its place what we need are the kinds of payments that are voluntary in nature and that individuals want to pay for out of self-interest. Proper government services concern self-defense, both of the individual and of the whole country. Paying for them honestly and justly requires developing voluntary methods, and disbanding the entire tax system (gradually but steadily).